Dalian iron ore futures hit a fresh six-month high on Thursday, while the Singapore benchmark price for the steelmaking ingredient climbed above $110 a tonne, propelled by brightening demand prospects in top steel producer China.
As the Chinese economy faces risks from rapidly spreading COVID-19 infections and a bleak outlook for global growth, policymakers are aiming to boost the scale of consumption and investment, the official Xinhua news agency said on Wednesday.
Boosting domestic demand will help China to pursue higher quality economic growth and cope with external risks, Xinhua said, citing the 2022-2035 plans issued by the cabinet.
The most-traded May iron ore on China’s Dalian Commodity Exchange ended daytime trade 3.2% higher at 830 yuan ($119.05) a tonne. It earlier touched 832 yuan, the highest since June 15.
On the Singapore Exchange, iron ore’s benchmark January contract was up 2.7% at $111.55 a tonne, as of 0847 GMT.
“The accelerated implementation of plans to stabilise the economy (and) the optimisation of epidemic prevention policies… have boosted market sentiment,” Zhongzhou Futures analysts said in a note.
Chinese steel benchmarks were also higher, with rebar on the Shanghai Futures Exchange up 3.3%, hot-rolled coil rising 2.7% and wire rod SWRcv1 gaining 2%. Stainless steel edged up 0.2%.
Other Dalian steelmaking inputs also gained, with coking coal and coke up 2% and 0.5%, respectively, as traders brushed off concerns about the impact of rising COVID-19 cases in China on consumer and industrial activity.
China’s economy lost more steam in November as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months, hobbled by surging COVID-19 cases and widespread virus curbs.
China’s November steel output, meanwhile, fell 6.5% from the previous month, as some steelmakers cut production to curb losses amid persistently weak demand.
